In today’s briefing:
- Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
- JPX-Nikkei 400 2022 Rebal: Final Predictions
- StubWorld: LG Corp In Unwind Territory
- End of Mandatory Lock-Up Periods for 40 Companies in Korea in July 2022
- HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
- Parker-Hannifin/Meggitt: Ready to Fly
- CitiBanamex – Potential Bidders Get Serious, We Stay Cautious on Banorte
Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
- Tianqi Lithium (9696 HK) is looking to sell up to 188.74m shares to raise up to US$1.97bn. Pricing at HK$69-82/share is a 52-43% discount to Tianqi Lithium (002466 CH).
- Between 32-38% of the total offer size is being taken by 7 cornerstone investors and they are locked in for 6 months from listing date (expected 13 July).
- Tianqi Lithium (9696 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in December. Southbound Stock Connect could come online soon after listing.
JPX-Nikkei 400 2022 Rebal: Final Predictions
- JPX-Nikkei 400 is composed of stocks listed on the Tokyo Stock Exchange selected based on multiple metrics relating to size, liquidity, financial performance, and corporate governance.
- The annual rebalance of the JPX-Nikkei 400 Index takes place in August every year and the cut-off date for the data used for this rebalance is the end of June.
- In this insight, we take a look at Quiddity’s final predictions for Potential ADDs/DELs for the August 2022 review.
StubWorld: LG Corp In Unwind Territory
- A double dose of StubWorld this week, as LG Corp (003550 KS)‘s NAV discount narrowing looks to have run its course.
- Preceding my comments on LG Copr are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
End of Mandatory Lock-Up Periods for 40 Companies in Korea in July 2022
- We discuss end of the mandatory lock-up periods for 40 stocks in Korea in July 2022, among which 7 are in KOSPI and 33 are in KOSDAQ.
- These 40 stocks on average could be subject to further selling pressures in July and could underperform relative to the market.
- Among these 40 stocks, LG Energy Solution (373220 KS) and Heung A Shipping (003280 KS) could face further selling pressures in the coming weeks.
HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
- Bilibili (9626 HK) will replace Sunac China Holdings (1918 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close of trading on 8 July.
- While Bilibili (9626 HK)‘s index inclusion is a surprise, the impact from passive fund trading is not a lot. Nothing much one can do on Sunac China Holdings (1918 HK).
- The Hang Seng China Enterprises Index (HSCEI INDEX) will drop 16.12 points at the close on 8 July. Something for traders to watch out for over the next week.
Parker-Hannifin/Meggitt: Ready to Fly
- UK Secretary of State has said Parker-Hannifin has addressed competition and national security concerns over its takeover of Meggitt PLC. Public consultation is pending, after which clearance is almost sure.
- As in the case of Ultra Electronics, it would be hard to justify the UK blocking a defence deal from a company based in a key ally, in my view.
- The market believes there will be a deal. As of 29 June, gross spread is 1.25%, estimated annual return (assuming settlement on 26 October) is 3.98%.
CitiBanamex – Potential Bidders Get Serious, We Stay Cautious on Banorte
- Banorte and Santander have both hired M&A advisors for a potential Citibanamex bid, according to Reuters; Banco Azteca is not participating in the bidding, whilst Inbursa is potentially still interested
- In the event of a bid, we do not expect Santander to be aggressive on price; Banorte could be more aggressive, which would increase its chances of a winning bid
- Were Banorte to acquire Citibanamex, we continue to believe that its prospective dividend could be at risk; in essence, the risks of M&A still outweigh the potential opportunities
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